Chinese Fishermen in Troubled Waters

A Chinese fisherman was shot dead on October 10 in a clash with South Korea’s Coast Guard, which accused Chinese fishermen of illegally fishing in South Korea’s exclusive economic zone (EEZ). The incident immediately caused tension between the two countries. A week later, a Chinese fishing boat captain was arrested by Japanese police for illegally fishing in waters near Japan’s Ogasawara islands.

In recent years, the region has been witnessing an increasing number of maritime incidents involving Chinese fishermen. These incidents have contributed to maritime tensions and occasionally even triggered clashes between China and its regional neighbors. To prevent or manage maritime incidents involving Chinese fishermen, it is important to understand the motivating factors behind the growing presence of Chinese fishermen in the disputed waters or even in other countries’ EEZs. Western media and some scholars tend to attribute it to a simple reason: China has weaponized its fishermen to strengthen its territorial claims in the disputed waters. China’s fishing expansion has been primarily driven, they argue, by strategic and political purposes, based on a strategy of “fish, protect, contest, and occupy.”

Strategic Considerations

Given its trans-boundary nature, marine fishing certainly carries an important political and diplomatic function, particularly in waters where disputes exist. It has been no secret that for decades China (as well as Vietnam, Philippines, and other countries) has considered fishermen important players in strengthening its maritime presence in disputed waters. Fishermen are provided with financial and political support to undertake fishing activities in the contested waters. And on an ad hoc basis, countries deploy fishermen and fishing boats to confront each other during maritime crises. For instance, both China and Vietnam dispatched fishing vessels during the recent 981 oil rig row. However, it would be very wrong to view the Chinese government’s strategic intentions as the key factor behind the growing number of fishing incidents involving Chinese fishermen.

First, the fishing incidents involving Chinese fishermen do not only occur in disputed waters in the South China Sea and East China Sea, where China has an interest in strengthening its maritime claims. In fact, these incidents occur almost everywhere, such as in the EEZs of South Korea – where the latest incident occurred – Russia, North Korea, Indonesia and Palau.

Second, the relationship between the Chinese government and the fishermen is complicated. On the one hand, it is very difficult for the Chinese government to control and manage its fishermen and stop them from fishing illegally; on the other hand, fishermen do not always trust government officials. In the latest anti-corruption campaign in Hainan, a dozen officials from China’s fishery administration were arrested for stealing or appropriating fishermen’s fuel subsidies.

Third, the geopolitical argument cannot explain why the Chinese government (with few exceptions) fails to provide financial compensation for many the fishermen who are detained or harassed by neighboring countries. Indeed, some fishermen are fined or disqualified from receiving fuel subsidies by the Chinese government after they return to China.

Fourth, while China has appeared to be more assertive in enforcing its maritime claims in the East China Sea and South China Sea, maintaining regional maritime stability is still its top priority. Thus, there seems little benefit for China in deliberately dispatching its fishermen to disputed waters to stir up tensions with neighboring countries. This is precisely why China banned its fishermen from fishing in waters near the Scarborough Shoal after the China and Philippines maritime standoff in 2012. It also explains why China does not provide a special fishing fuel subsidy for fishing in the Senkaku/Diaoyu islands, despite calls for its do so from fishermen and scholars.

Structural Changes

In 1985, nearly 90 percent of China’s total marine catch was from inshore waters, primarily in the Yellow and Bohai seas. The offshore catch, mostly taking place in the East China Sea and around the South China Seas, accounted for just 10 percent. By 2002, the inshore catch had fallen to less than 65 percent of the total, while the offshore catch had risen to 35 percent. While national data on the inshore and offshore marine catch have been unavailable since 2002, data from provincial level and other sources show that this structural change from inshore to offshore fishing has continued, and the marine catch from offshore waters in East China Sea and South China is rising rapidly. This structural shift from inshore to offshore fishing is the result of the combined effects of market forces and the government’s fishing policies.

As incomes grow, the Chinese are consuming more and more marine products. Per capita consumption of seafood has increased by 100 percent over the past two decades. While much of this rapid surge in demand has been met by the phenomenal development of the fish farming sector, there is growing demand for marine catches, with the expanding middle class and growing concerns over the safety of cultured marine products. On the supply side, meanwhile, inshore fishing has suffered from a rapid depletion of fisheries resources due to years of over-fishing, pollution, and excessive land reclamation along China’s coastal regions. Consequently, there are strong market forces driving China’s fishing industry to expand further to offshore and even distant waters.

Growing demand for marine products to feed China’s 1.4 billion people is not the only market force behind this structural shift. China is not only the largest producer of fisheries products, it is also the largest exporter with the world’s biggest seafood processing industry. In addition, in recent years, rapidly rising demand for fisheries products such as giant clams and coral as handicraft for decorating and collecting purposes has emerged as another important force shaping China’s fishing industry. For instance, the rise of the giant clam handicraft industry has completed transformed the fishing town of Tanmen in China’s Hainan province. Traditionally, fishermen in Tamen relied on the fish catch as their primary source of income. Over the past few years, however, more and more local fishermen have given up fishing and specialized in harvesting giant clams, which bring much higher profits. With the rapid depletion of giant clams in the country’s inshore waters, local fishermen are venturing further and further into the South China Sea.

Government Policies

Facing rising demand for marine products and declining supply in inshore waters, the Chinese government has taken significant steps to contain marine production, primarily in inshore waters, where overfishing is endemic. For instance, to cap overfishing and preserve resources, China has been imposing an annual fishing ban in the South China Sea since the late 1990s. However, this fishing ban does not cover the Spratly Islands, which encourages Chinese fishermen to fish in those waters during the period of the ban.

As for its fishing fleet, under a zero growth policy, action has been taken at both central and local level to downsize the fleet and transfer fishermen to other work. In the late 1990s, China ceased issuing new fishing certificates and began providing financial incentives to encourage the fishermen to demolish old boats and take up jobs onshore. However, in 2006 when China made the historic decision to abolish the agricultural tax and subsidize the country’s agricultural production, the fishing sector, as a subsector of agriculture, began to receive huge financial support in the form of a fishing fuel subsidy. This subsidy is paid to the fishing boat owner annually, based on the horsepower of the fishing vessel, and has nothing to do with the actual amount of fuel consumed. Parallel to the drastic increase in China’s total agricultural subsidy, the fishing fuel subsidy increased more than sevenfold from 2006 to 2012, reaching 23.4 billion renminbi ($3.8 billion) in 2012. The fishing fuel subsidy now represents the major portion of the financial support given to the Chinese fishing industry, and accounts for nearly half of the annual incomes of Chinese fishing vessel owners, according to some sample surveys.

This huge fuel subsidy program has stymied efforts to reduce the country’s fishing fleet: Owners who participate in the reduction program receive the equivalent of only about two years of the fuel subsidy. Consequently, fewer owners opt for the program; instead they prefer to build new ships. As the fuel subsidy is paid based on the horsepower of the vessel and no new fishing vessel certificates are being issued, fishermen have been scrapping their smaller, old ships and building new and bigger vessels, buying horsepower from their peers. According to official statistics, between 2004 to 2012, while the total number of fishing vessels in China decreased by 12 percent, the average horsepower and tonnage rose by 22 percent and 33 percent, respectively.

It is important to keep in mind that fishermen are self-motivated economic players with the ultimate objective of increasing their earnings. Now, equipped with bigger and better fishing vessels yet very limited resources in their near waters, Chinese fishermen naturally venture farther out – be it into disputed waters in the East or South China Seas or even neighboring countries’ EEZs – where the fish are plenty.

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Robert A. Kapp is senior advisor to the China Program at the Carter Center. He has been principal of Robert A. Kapp and Associates, a business consulting firm, since 2004. From 1994 through 2004 he served as President of the United States-China Business Council…